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This article explores the problems of nominee arrangements under the Foreign Business Act B.E. 2542 (hereinafter the “FBA”), which is caused by the impractical definition of “foreigners” under Section 4 of the FBA, and the unclear criteria relating to what constitutes a “nominee arrangement”, which is prohibited under the relevant laws.
Nominee arrangements are a major problem for foreign business laws in Thailand, as they allow foreigners to circumvent laws which aim to protect the economic interests of Thailand against foreign ownership and control, and protect the interests of Thai businesses in sensitive sectors in which Thai businesses may not yet be ready to compete with multinational corporations looking to expand the scope of their business to Thailand.
Despite the laws being effective for over 40 years, the nominee arrangement problem remains a prominent and long standing issue in Thailand, and thus, it is essential to find suitable and practical solutions to fix these problems, with primary focus on revising the definition of “foreigners” and providing a clear criteria to facilitate the identification of a “nominee arrangement” under the FBA respectively. With the implementation of the proposed solutions, nominee arrangements will be eradicated over time, which would result in a more balanced playing field which will both protect Thai businesses and also promote foreign businesses in Thailand.
Sakon Harnsuthivarint, ‘Nominee Holding Shares for Foreigners’ (Bankokbiznews, 8 March 2016), <https://www.bangkokbiznews.com/blog/detail/637132> accessed 24 September 2019
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